The Chief Secretary for Administration and Chairperson of the Commission on Poverty (CoP), Mrs Carrie Lam, today (December 22) launched a six-month public engagement exercise on retirement protection.

Entitled "Retirement Protection, Forging Ahead", it aims to gauge public views on how to improve Hong Kong's retirement protection system.

"Hong Kong has adopted a multi-pillar retirement protection system. The social security pillar and the retirement protection system were strengthened by the current term of Government after it assumed office through the introduction of the Old Age Living Allowance (OALA) in 2013.

"While OALA already benefits over 420 000 elderly people, the Government remains determined and committed to enhancing the well-being of the elderly.

"As such, the CoP has been tasked to identify ways to enhance retirement protection in Hong Kong together with the community. In his Policy Address delivered early this year, the Chief Executive earmarked $50 billion to provide for future needs," Mrs Lam said.

"This is the first time in 18 years since Hong Kong's return to the motherland that a public consultation is being held on retirement protection. It shows the positive stance of the Government in addressing social problems of the day," Mrs Lam continued.

As she pointed out, this consultation has several unique features:

(1) The consultation is being carried out under the name of the CoP. The stance and its contents reflect the views of CoP members. Individual issues on which CoP members have divergent views have been presented in full and truthful terms in this consultation document.

(2) On whether the "regardless of rich or poor" principle or the "those with financial needs" principle should be adopted, the consultation document puts forth two simulated options and compares their increased expenditure and the impact on public finances based on voluminous data analyses. This is to facilitate rational and pragmatic discussion.

(3) As a responsible government, the Government has to clearly explain its position to Hong Kong people. In a nutshell, the Government has reservations about any options that are provided regardless of means and apply equally to all the elderly. Nonetheless, the Government agrees that the existing retirement protection system has room for improvement and does not want to see retirement protection efforts coming to a standstill.

(4) The CoP will make good use of this six-month period to listen to a wide cross-section of public views, particularly from young people, through various channels, including social media.

"The scope of this consultation is comprehensive. Apart from addressing the core issue on whether the 'regardless of rich or poor' principle or the 'those with financial needs' principle should be adopted to provide better protection for the elderly, this consultation paper also reviews the operation of other pillars. Another contentious issue which needs to be addressed is the offsetting arrangement of the Mandatory Provident Fund (MPF) Scheme," Mrs Lam said.

Mrs Lam pointed out that, when considered purely from the perspective of retirement protection, the offsetting arrangement will undoubtedly give rise to benefits leakage from the MPF Scheme, weakening its retirement protection function. The CoP agrees that the complexity of the offsetting issue should not be underestimated.

She said that the CoP is of the view that the community should make good use of the opportunity offered by this consultation to conduct thorough and in-depth discussion on the impact of the feasible options to address the offsetting issue on employers and employees, as well as the role of the Government. The community should endeavour to find a way acceptable to both employers and employees. The community should also consider ways to rationalise the relationship between severance payment/long service payment and the MPF Scheme, and discuss mitigation measures which can reduce the impact of any changes on the business sector (especially the small and medium-sized enterprises) and the labour market.

"Apart from the social security pillar and the MPF pillar, there is ample room for discussion on other pillars. These include possible policy means to further encourage voluntary savings to complement the MPF Scheme which does not cover the non-working population, and the possibility of introducing an annuity scheme or issuing more retail bonds with a longer term to maturity, to help ensure better living for the elderly. In addition, with more and more elderly people having self-owned properties, consideration should be given to helping them release the value of their properties to increase retirement income."

Mrs Lam appealed to all members of the community to express views in the six-month public engagement exercise, which includes consultation with the Legislative Council and the 18 District Councils, chambers of commerce, trade unions and focus groups. The Government will also organise district forums and focus groups. For details of the five district forums, please refer to the press release issued separately.

The six-month public engagement exercise will end on June 21, 2016. The consultation document, executive summary and leaflet can be downloaded from the dedicated website of "Retirement Protection, Forging Ahead" (www.rp.gov.hk) or collected from the Public Enquiry Services Centres of the Home Affairs Department. Details of relevant public engagement activities will also be announced at the above website.